Europe’s battery start-up Northvolt AB has collapsed into insolvency in its home market, dealing a major blow to Europe’s ambition to establish its own EV battery manufacturing program.
In November 2024 the Swedish firm confirmed it had filed for Chapter 11 bankruptcy protection in the United States, after it failed to agree a last-minute rescue package with investors.
At the time Northvolt said the filing for Chapter 11 reorganisation in the United States would allow it access to approximately $245 million in new financing in order to keep operating.
It was later revealed that the German government would assume more than €600 million ($629 million) of debt that its development bank had extended to Northvolt for the construction of a battery plant in the country.
Swedish bankruptcy
But now four months after the US Chapter 11 filing, Northvolt has announced that “following an exhaustive effort to explore all available means to secure a viable financial and operational future for the company, the Board of Directors of Northvolt AB today announced that it has filed for bankruptcy in Sweden.”
It stated that like many companies in the battery sector, Northvolt has “experienced a series of compounding challenges in recent months that eroded its financial position, including rising capital costs, geopolitical instability, subsequent supply chain disruptions, and shifts in market demand.”
Northvolt said that “despite pursuing all available options to negotiate and implement a financial restructuring, including a Chapter 11 restructuring process in the United States, and despite liquidity support from our lenders and key counterparties, the company was unable to secure the necessary financial conditions to continue in its current form.”
The Board therefore said it had determined that this is the only available solution while the company pursues all realistic options to obtain financing to continue operating during the Swedish bankruptcy process.
Following the filing, a Swedish court-appointed trustee will now oversee the process, including the sale of the business and its assets and settlement of outstanding obligations.
The entities Northvolt AB, Northvolt Ett AB, Northvolt Labs AB, Northvolt Revolt AB and Northvolt Systems AB filed with the Swedish court.
However Northvolt Germany and Northvolt North America are not filing for bankruptcy in their respective jurisdictions.
“This is an incredibly difficult day for everyone at Northvolt,” said Tom Johnstone, Interim Chairman of Northvolt’s Board of Directors. “We set out to build something groundbreaking – to drive real change in the battery, EV and wider European industry and accelerate the transition to a green and sustainable future.”
“The outcome is especially hard considering not only the level of engagement and interest we held with potential partners and investors in recent months, but also the clear improvement and upwards trajectory that we have been seeing in Northvolt’s production in Skellefteå, where cell output from serial production lines has doubled and we have secured a 50 percent improvement in production yield since September,” said Johnstone.
“The passion, dedication, and innovation of our team has been nothing short of extraordinary, and we deeply regret that there is not a different path forward,” he said. “I want to extend my strongest gratitude to our employees, customers, suppliers, investors, and partners who believed in Northvolt’s mission. I also want to extend the same gratitude for all the support we received from the communities in Skellefteå and Västerås.”
No surprise
Northvolt’s collapse into insolvency comes as no surprise, after the firm last year had previously mooted the possibility of bankruptcy protection in the United States and had appointed a restructuring expert, as one of several options for the cash-strapped company to survive.
In September 2024 after a strategic review and as part of a cost cutting exercise, the firm announced it would cut 25 percent of its workforce.
Northvolt had been in talks with investors and lenders in October over securing short-term funding worth about 200 million euros ($218m, £167m).
That funding however was not considered enough to secure the company’s future however, and shortly after that it was reported that the talks with creditors, shareholders and at least one customer on a short-term financing deal had stalled.
That came soon after the company replaced the chief executive of its Northvolt Ett (“One”) factory.
Then in November 2024 Northvolt filed for Chapter 11 bankruptcy in the US after it failed to agree a last-minute rescue package with investors.
At the same time Northvolt also announced hat it’s CEO and co-founder Peter Carlsson was stepping down.
Troubled period
Northvolt had been Europe’s best-funded start-up, and in total the lithium-ion battery manufacturer had received approximately 10 billion euros ($10.57 billion) in funding since its startup in 2016.
Some figures suggest it raised as much as $15 billion from investors such as Volkswagen, Goldman Sachs and BlackRock as well as from the German and Canadian governments.
Northvolt was seen as crucial to Europe’s automotive industry and its best chance of pushing back against Asian battery production and local players such as China’s CATL and BYD; Japan’s Panasonic; and South Korea’s LG and Samsung.
But the company had struggled to increase production at its one factory in Skellefteå in northern Sweden.
Prior to its bankruptcy filing, Northvolt had admitted it did not plan to meet a goal of producing 100,000 cells per week, after Reuters had reported it has been consistently missing internal production targets since early September (it was only producing 20,000 cells per week last Setepmber).
The delays meant Northvolt lost a 2 billion euro (£1.7bn) contract with BMW in June 2024, since which time it has been primarily producing for truck maker Scania as well as Volkswagen’s Audi and Porsche brands.